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Discount department-store chains posted strong sales growth in the second quarter, helping fuel their expansion plans.
Target reported a 3.4 percent increase in same-store sales for the quarter. Wall Street analysts had expected sales to grow by 3 percent. The discounter says transactions were up by 2.4 percent during the quarter and that the average transaction amount was 0.9 percent higher. Comparable digital sales grew by 34 percent, meanwhile.
“We continue to see the most rapid growth in our same-day fulfillment options, in-store pickup, drive-up, and Shipt, which together have more than doubled their sales in the last year,” said Chairman and CEO Brian Cornell on an earnings call. “These options offer speed, convenience and reliability and, as a result, they are quickly becoming the preferred fulfillment choices for our guests. And most importantly, because these options leverage our store infrastructure, technology and teams, same-day fulfillment delivers outstanding financial performance as well.”
Target completed 84 remodels in the second quarter and is on track to deliver approximately 300 this year, Cornell said. “These projects transform the shopping environment, featuring end-to-end improvements in our decor, lighting and merchandise displays,” he said. “In addition, they incorporate changes to optimize digital fulfillment, enabling speed and reliability for our guests, and efficiency in support of our financial performance.”
Cornell said Target will open nearly 30 small-format stores per year for the foreseeable future. Many of these will go into major metro areas or be near college campuses. The stores will range from 15,000 square feet to 40,000 square feet, depending on location.
At Walmart, meanwhile, same-store sales climbed by 2.8 percent, transactions grew by 0.6 percent and average transaction amount increased by 2.2 percent. Comparable digital sales rose by 37 percent. Online grocery sales were a big driver of sales growth, the company said.
During the quarter, Walmart remodeled about 150 stores. “We continue to see the clear competitive advantage with our Supercenters' proximity to customers in combination with our robust omni-channel offering,” said Walmart U.S. President and CEO Greg Foran on an earnings call. “We have more than 2,700 stores that offer free grocery pickup and more than 1,100 stores that offer same-day grocery delivery. We remain on pace to reach our year-end goal of 1,600 same-day grocery delivery stores. … We’ve got nearly 1,200 pickup towers and stores now.”
By Brannon Boswell
Executive Editor, Commerce + Communities Today